What type of investor are you?
There are typically three types of investors. For feasibility, we will refer to them as Type I, II and III. Which type are you? Feel free to comment.
Type I: These are new individuals looking to learn about more about investing. They are typically young in age and are fairly new to investing. Being new to investing, these individual will usually get their investment ideas from a stock broker’s recommendation or story they have read in Forbes or a television show. The main characteristic of this group is they are more likely follow the crowd and invest in sectors that are in favor.
If you belong to this group, keep in mind stock brokers are paid to push stocks. They are a sales person. If you wait for an article to be publish on Forbes or the Wall St. Journal before making your moves, it is usually too late. The market is too efficient.
Type II: This group of investors might have a few year of investing experience under their belt, perhaps a recent college graduated that are now faced with the challenge of investing for the future. These new investors are technology savvy and typically open to investing online. For many of them, online research and investing is their primary method. While this group might still gravitate towards professional money managers and the mainstream media for investment matters, they are open to obtaining their information from alternative sources.
If you belong to this group, you are probably on the right track to becoming independent investors. However, if someone asks you about the future of the economy and how it might affect your portfolio, if your answer starts with “My broker says….”; you are still a Type I.
Type III: These are experienced self-directed investors. They might have a money manager which helps them manage part of their portfolio, but they are focused on meeting their financial objectives on their own. They tend to think independently from the crowd and take a contrarian view on stocks and other investment matters. These are value investors that usually will look at “out of favor” stocks and buy them when others are selling. They tend to be more risky, but are also very savvy in their stock picking techniques.
This group of investors is rare, but highly successful if they are discipline and do their own homework instead of relying on their stock broker or some TV show for their investment ideas. Following the crowd is not their style.
What type of investor are you?
Comments
type I and a half :D
Posted by: shraz | February 25, 2007 06:30 PM